APAC leads the way in adopting AI

As artificial intelligence (AI) technologies increasingly find their way into the traditional world of wealth management, a new balancing act has emerged that will define the future of the industry: an advisory service that blends man and machine to give better services and improved results for increasingly tech-savvy high-net-worth individuals (HNWIs) and newly affluent clients.

To better understand how AI is playing out on the ground and where the technology is heading, Temenos and Forbes Insights surveyed 310 wealth managers and HNW investors across the globe about their acceptance, understanding and use of AI in wealth management. Of all the respondents, a quarter came from the APAC region. The clear message from the study is that, with the growing deployment of AI solutions for wealthy clients, a new type of wealth manager is emerging — and APAC is leading the way.

Just two years ago, the 2016 Forbes Insights/Temenos survey revealed palpable hesitation among wealth managers, with only a quarter surveyed viewing the digitisation of wealth management services as essential. Today, that percentage has jumped to 52% on a global level — a major leap — and executives resolutely see digital technologies as essential to the successful delivery of enhanced client experiences. Wealth managers in APAC appear to be particularly optimistic and are the most open to digitisation amongst all the regions — 70% of respondents from the region believe digitisation is essential to them to wealth management, for both providers and clients (Figure 1).

Note: Total percentages may not add to 100 due to rounding.

The results of the 2018 Forbes Insights/Temenos survey show that wealth managers are keenly aware of the importance of technology — particularly AI — across key areas of their organisations. In APAC, a significant portion is already seeing improved results in all areas — including cybersecurity, portfolio returns and client communication — as a result of implementing these technologies (Figures 2 and 3).

The survey results also show that sentiment defines the industry on the international stage. More than a third of wealth managers globally are actively deploying AI and are “all-in”; a quarter are testing AI solutions; and 35% are “extremely interested”. Wealth managers in APAC appear to be furthest ahead with their implementation plans — according to the survey, 78% of wealth managers in APAC plan to deploy AI in the next year, with 22% planning to do so in the coming six months.

Robo-advisors
Two years ago, robo-advisory, which automates asset allocation and portfolio management, was a radically new technology in wealth management. Today, almost 87% of wealth managers surveyed in the APAC region view robo-advisory positively.

How AI is affecting HNWIs
Wealthy clients are becoming more sophisticated in their use of technology, a secular trend that will only gather momentum as millennials and younger generations mature to form the core segment of the wealth management business. The survey showed that 75% of HNWIs are positive about the use of AI, while 83% are supportive of their wealth manager adopting some level of AI immediately (Figures 4 and 5).

Given the inevitability of an integrated AI experience driving better service and results, any wealth manager that ignores or delays testing and deployment of the technology risks falling behind. That virtually every executive in the 2018 Forbes Insights/Temenos survey sees AI as an essential tool in their practice is more than a telling indication of where the industry lies right now — it’s a sign to take action.

As Ed Gogel, a HNWI investor with a wealth of experience in computers and AI, said, “Clients are going to demand AI because they’re already saying, ‘If my car can drive itself, why can’t my portfolio manage itself?’ When you have a very good wealth manager, the returns that you can see are amazing if it’s actively managed with an AI strategy.”

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